Monday, June 27, 2016

Brexit Makes Waves Along the Straits of Gibraltar

A
U.K. vote to leave the European Union this week could intensify price
competition over bunker fuels in the Mediterranean, as two key ports in
the region vie for dominance.

A vote for the U.K. to leave the
EU would mean Gibraltar, its port and physical border, would also exit.
For ship owners operating in the Mediterranean, a U.K.-Gibraltar
"Brexit" would increase the number of administrative steps they would
face, should their vessels wish to stop at other European ports after
anchoring at Gibraltar, industry sources said. This could favor
bunkering at Algeciras, a source at Spain's governmental port authority
told OPIS.

Gibraltar, whose bunker operators include Cepsa, Vemaoil and Aegean
Bunkering, could move to lower prices in order to continue to attract
tankers into its port. Bunker fuels administered at the port currently
enjoy a tax-free status within the EU.

The port of Algeciras, already something of a hub with respect to the
storage and transit of oil products and bunkering, is poised to seize
new customs should shipowners opt to avoid the port of Gibraltar. Last
year, Algeciras administered some 3.2 million tons of bunker fuels. Some
8,600 vessels have stopped at the port to refuel so far this year.

"It's a hot question these days," Agustin Silva, managing director of the Vopak Algeciras storage terminal,
which specializes in bunker fuels, told OPIS in an email last week. "At
Vopak Algeciras we don't see as a threat the Brexit. Today, Algeciras
and Gibraltar compete with already different customs and excise regimes.

Gibraltar today is not part of the Common Customs Territory ... as
Vopak we have the maximum respect for the political decisions of the
countries we operate in."

"If prices at Gibraltar do go up, people will switch to somewhere
else [for bunkering]," the shipbroker said. "There are plenty of
options. But Gibraltar is such a brilliant place for vessels to stop.
Strategically, it's convenient and incredibly safe, I don't think that
for a couple of hours in extra paperwork ship owners will stop using
it," he added.

The impact of the Brexit on the bunkering activities of Algeciras and
Gibraltar "remains to be seen," a spokeswoman for the Algeciras port
authority told OPIS.

The Gibraltar port authority did not respond to requests to comment by presstime.